HEALTHCARE EXCHANGES AND COVERAGE COSTS

January 1, 2014 and people are flocking to the health exchanges to find cheap health coverage because the Affordable Care Act (ACA) has promised "Affordable Health Care". According to the ACA, affordable means the cost will be no more than 9.5% of income.  If it is higher than 9.5% there will be tax credits and/or subsidies given to make it affordable.  

Interestingly, the cost of a person who is 64 years old cannot be any higher than 3 times the cost of a 20 year old.  In other words, the cost for older people, who use on average 5 times the amount of health care than a 20 year old, would pay less while the 20 year old will pay more, than in our current market.  In addition, if you are a smoker, your premium can be up to 50% more than a non-smoker at the same age level.  The question is, if I am a smoker and paying 50% more than a non-smoker making it unaffordable for me, will I get a subsidy even though if I wasn't a smoker it would be affordable?  Since the smoking surcharge is considered a penalty, the answer seems to be no.  

Since coverage in the exchanges will be guaranteed issue, it seems that younger, healthier people will find cheaper coverage elsewhere while older, sicker people will flock to it. If this happens it won't be long before the exchanges implode and/or we are taxed even more to supplement the deficit. 

YOU NEED TO TELL YOUR EMPLOYEES ABOUT THE EXCHANGES, MARCH 2013

According to the Affordable Care Act (Health Reform), by March 2013 all employers must notify their employees of the existence of the Maryland Health Benefits Exchange.  In addition they will need to provide:

1. Written notice informing employees about the state’s Exchange, including a description of how the employee may contact the Exchange for assistance.
2. Notification to employees if the plan offered by the employer is inadequate, meaning it does not meet the actuarial value of 60 percent. The employer must let employees know that they may be eligible for a premium tax credit and a cost-sharing reduction if they purchase a health plan through the Exchange.
3. Employers must notify employees that if they purchase a health plan through the Exchange, the employee may lose the employer’s contribution to health benefits offered by the employer.

The Maryland Health Benefit Exchange will begin enrollments into their plans October 2013 for a January 1, 2014 effective date.  Brooks Benefit Services will be forwarding verbiage for this notification to all of our clients.  In addition we will be able to assist any employees with determining whether the exchange plans may or may not be a good fit for them.  It is important to remember that the exchanges are available to all employees whether they are full-time or part-time.  

The Maryland Health Exchange is going to be made up of several plans: Bronze, Silver, Gold, Platinum and a Catastrophic plan for younger people.  These plans will be underwritten by current carriers and will basically compete with themselves.  Since the coverage through the exchange is guaranteed issue, many believe most of our sickest and oldest individuals will jump or be pushed into these plans.  Since the cost of these plans is directly relative to the individuals income, it could make more sense to go with an exchange plan than one through an employer and visa-versa.  Depending upon the size of the employer (50+ Full-Time Employees), if the employee goes to the exchange,  your plan is deemed to either be "un-affordable" or isn't "minimal essential coverage", you will be fined.....heavily.

If any of this is new to you or needs further conversation, please do not hesitate to contact our office at 410-239-5009.